SUNS 4340 Tuesday 8 December 1998
LATIN AMERICA: EXXON-MOBIL RUBS ITS HANDS OVER THE REGION
Mexico City, Dec 4 (IPS/Diego Cevallos) -- Directors of US oil giants Exxon and Mobil celebrated gleefully as this weeks' merger gave them added strength for a move into Latin America - a region which criticised and even expelled their transnationals in the past.
This megafusion creating the biggest oil company in the world, coincided with the dynamic liberalisation of the energy sector in Latin America - with its 13.4 percent of the world's crude oil stocks - providing a hot opening for the new titan.
"This union will make the most of privatisation advantages throughout the world and Latin America, Exxon and Mobil know they now have greater possibilities," Sergio Suarez, coordinator of the Energy Area of the Independent National University of Mexico (UNAM) Economic Research Institute, told IPS.
With strong presence in Argentina, Honduras, Peru and Venezuela and business in nearly all the other countries of the area - either in exploration, exploitation, refining or marketing of crude - the US firms make nearly 80 billion dollars per year in shares alone.
Apart from Mexico and Cuba, where foreign oil companies have limited participation, there are no major bars to the new Exxon Mobil Corporation doing highly lucrative business in the rest of the region, said Suarez. The company already makes 200 billion dollars per year.
The company first entered Latin America in 1910, when the US transnational Standard Oil - the forerunner of Exxon and Mobil founded in 1882 - burst into the region.
In Mexico, Standard Oil increased the nation's crude production from 3.6 million barrels per year to 12.5 million between 1910 and 1911.
When Mexican exploitation fell in the early twenties, the transnational homed in on Venezuela, a country where six years efforts upped production from 3.6 million barrels per year to 105 million, making it the world leader.
"From the dawn of the century, Latin America was the hub of development for the US oil companies, the same groups which are now starting to take control again," Isaac Palacios, UNAM energy researcher, told IPS.
Data from the Economic Commission for Latin America and the Caribbean (ECLAC) state that in 1914, US oil companies' investments abroad were worth 143 million dollars, 110 million of these in Latin America.
For 1920, investment in these firms tripled, while 23 British oil companies, attracted by the profitable business of buying cheap crude and selling expensive petrol, also arrived in the zone.
In 1938, Mexico expelled the foreign oil companies with arguments of high octane nationalism and accusations of political interference, an example picked up on by Cuba, following the revolutionary process of 1959.
The oil companies, which several historians claim played a role in the designation and destitution of presidents in Latin America, and fostered conflicts, like the 1941 war between Ecuador and Peru, came in for heavy questioning in the late sixties and early seventies.
Bolivia implemented nationalisation processes for its industry in 1937 and 1969, Peru did the same in 1968, Ecuador between 1972 and 1976, while Venezuela did so in 1975.
Today, as the wave of privatisation is sweeping over the region, the oil TNCs are once again ready with their million dollar investments "and are starting to have new influence and even power to set crude prices," said the UNAM investors.
And Latin America is still a good source of energy resources.
Statistics produced by the Ecuador-based Latin American Energy Organisation (OLADE) indicate the region has proven oil reserves to last more than 42 years and that its crude production represented 13.3 percent of the world total.
According to the UNAM investigators, if the privatisation drive continues, Mexico, one of the few countries at present not open to US oil companies, will be the next big target for the Exxon Mobil
Corporation.